Unfair Dismissal Case: Whether a Genuine Redundancy

In Cardy, Tamica v Local Trades Specialists Group Pty Ltd [2018] FWC 2034, handed down on 30 April 2018, Deputy President Beaumont criticised the practices of Local Trades Specialists Group Pty Ltd, trading as Local Trades (Local Trades). In her judgment, Deputy President Beaumont found that Local Trades had unfairly dismissed its account manager (the applicant) by claiming it had to make her redundant because the business was “. . . losing money and struggling to keep up with its creditors” (see paragraph [29]).

Background

Local Trades is a directory style business connecting tradespeople with potential customers. The case arose as a result of Local Trades' former customer service and account manager, the applicant, bringing an action for her unfair dismissal against Local Trades. The company terminated her employment in 2017 on the basis of the business's ongoing financial and operational struggles.

The Applicant's Case

In her claim for unfair dismissal, the applicant argued that her employer had failed to consult with her about possible redeployment options. She also argued that her redundancy was not a real redundancy as another staff member had also been hired to do parts of her work. Supporting this contention was evidence that the applicant was instructed to email clients before finishing with Local Trades to advise those clients of the commencement of the new worker.

The Respondent's Case

In response, Local Trades asserted it had followed its responsibilities under the "Small Business Unfair Dismissal Code" (the Code). Following this assertion, Local Trades argued that the new employee, said to be replacing the applicant, was in fact a contractor and that the ". . . cost of the contractor was nowhere near the cost of employing a full-time person" (see paragraph [26]). Local Trades argued the reason for the dismissal was "downturn in the business" and "financial difficulty" (see paragraph [26]). To support its arguments Local Trades provided documents showing that for a period of six months up to 31 December 2017, it had experienced a net loss of tens of thousands of dollars in its operations.

The Commission's Decision

In upholding the applicant's claim, Deputy President Beaumont was of the view that "t is the case that the dismissal of Ms Cardy was not by way of genuine redundancy as that term is understood under the Act and that the objection premised on compliance with the Code is not made out" (see paragraph [76]). 

To establish a "genuine redundancy", Deputy President Beaumont held that Local Trades needed to prove the applicant’s role no longer needed to be performed. She therefore found that there were no details provided by Local Trades as to the nature of the new hire and whether they were an employee or contractor. At paragraph [64] Deputy President Beaumont stated:

In Deputy President Beaumont's view, Local Trades had not proven that it no longer needed someone to do the applicants’s work. Further, Deputy President Beaumont held that "procedural deficits, including the failure to make a redundancy payment, gave rise to unfairness in the particular circumstances of this case. The dismissal was therefore unfair within the meaning of the Act" (at paragraph [98]).

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Cardy, Tamica v Local Trades Specialists Group Pty Ltd [2018] FWC 2034 (30 April 2018)